VW increases spending to become world’s No. 1 carmaker

Volkswagen is expected to increase investment in new models and factories in order to achieve its long-term goal of becoming the world’s largest carmaker.

Although VW Group depends less on Europe than rivals PSA Peugeot Citroen and Fiat, it’s more and more difficult for the German giant to find the necessary cash to achieve its ambitious goal. On Friday, VW’s supervisory board is due to sign off on new spending targets for 2013-2017, with the carmaker expected to increase spending by 12 percent to as much as 70 billion euros.

The sum includes spending for all its twelve brands over the next five years. By comparison, a year ago VW agreed to spend 63.4 billion euros for the 2012-2016 period. For VW Group, the 70 billion euros is a record level for spending, but in terms of growth it represents a slowdown, as the previous spending target was raised 20.9 percent to 62.4 billion euros from 51.6 billion euros for the 2011-2015 period.

“Pressure to cut costs is definitely higher in such difficult times, but we must keep up spending to meet our expansion goals,” Peter Mosch, a member of VW’s supervisory board, told Reuters. VW wants to replace Toyota as the world’s number one automaker no later than 2018, and for that it keeps increasing its presence outside Europe, planning new factories in China, Mexico and Russia.

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